Drops in oil prices have taken a toll on U.S. hotel performance
in major oil and gas tracts, according to a STR Analytics report released Thursday.
Revenue per available room in major oil and gas submarkets has
outpaced the rest of the country for years. But in 2015, their 6 percent RevPAR
growth instead has trailed the country’s 12-month running 8 percent, as
measured by STR.
Demand also is falling, by 0.3 percent in March and 3.5
percent in April across the top 20 oil-dependent tracts.
STR Analytics director Steve Hennis attributed the lagging
performance to low oil prices and a steady increase of supply. “As most people
already know, the growth of the U.S. oil and gas industry over the past few
years has been a boon to the hotel industry, particularly in remote locations
where the hotel markets were previously small to negligible,” he said.
Oil and gas markets have accounted for 25 percent of new
supply since 2010, according to STR. North Dakota supply increased 73.4 percent;
Midland, Texas, went up 44.4 percent; and South Texas grew and 37.7 percent.
In the middle of 2013, that extra supply began to outpace
demand, and occupancy began to decline, as did RevPAR. U.S. oil prices,
meanwhile, have declined since 2014 and demand has plummeted further, including
a 9 percent drop in North Dakota in April, according to STR.
“It is too early to tell if this is a shift in the trend,
but it may be a possible warning sign of the potential fallout in these regions
if oil prices remain low,” Hennis said.
The hotel industry isn’t the only one losing energy sector business.
Houston-based United Airlines reported decreased revenue during the
first quarter of 2015 as a result of travel cutbacks in the energy sector.